Porter’s five forces and generic strategies

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Porter's Five Forces and Generic Strategies explained in brief.

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  • it doesnt tells how linkedin
    follow this model.nt of much use..
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Porter’s five forces and generic strategies

  1. 1. PORTER’S FIVE FORCES AND GENERIC STRATEGIES -Prepared by: Rohit Dobaria Vikas Surani Viral Jani Tina Mittal Jigar Modi Janak Nayak
  2. 2. Porter’s Five Forces
  3. 3. Introduction <ul><li>Developed by Michael E. Porter, 1980. </li></ul><ul><li>Identified five competitive forces that shape every industry and market. </li></ul><ul><li>These forces determine the intensity of competition and hence profitability and attractiveness of industry. </li></ul>
  4. 5. 1. Bargaining power of Suppliers <ul><li>Suppliers : All sources needed to provide goods or services. </li></ul><ul><li>When is the Bargaining power high? </li></ul>
  5. 6. 2. Bargaining power of Customers <ul><li>It determines how much customers can impose pressure on margins and volumes. </li></ul><ul><li>When is the bargaining power high? </li></ul>
  6. 7. 3. Threat of New Entrants <ul><li>Higher the competition, easier for other companies to enter. </li></ul><ul><li>New entries depend on the barriers to entry. </li></ul>
  7. 8. 4. Threat of Substitutes <ul><li>Substitutes : Alternative products with lower prices of better performance parameters for the same purpose. </li></ul><ul><li>Can reduce potential sales volume for existing players. </li></ul><ul><li>What are the factors determining the Threat of Substitutes? </li></ul>
  8. 9. 5. Competitive Rivalry <ul><li>Describes the intensity of competition between existing players. </li></ul><ul><li>High competitiveness -> Pressure on prices, margins -> reduced profitability for every company </li></ul><ul><li>When is the competition high? </li></ul>
  9. 10. Limitations <ul><li>The model assumes a classic perfect market. </li></ul><ul><li>Best applicable for analysis of simple market structures. </li></ul><ul><li>The model assumes relatively static market structures. </li></ul>
  10. 11. GENERIC STRATEGY 1. COST LEADERSHIP 2. DIFFERENTIATION 3. FOCUS STRATEGY
  11. 12. <ul><li>1.Cost leadership </li></ul><ul><li>The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. </li></ul>
  12. 13. <ul><li>2. Differentiation </li></ul><ul><li>Allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. </li></ul><ul><li>The differentiating organization will incur additional costs in creating their competitive advantage. </li></ul>
  13. 14. <ul><li>3. Focus Strategy </li></ul><ul><li>Also known as Niche Strategy </li></ul><ul><li>Stuck in the middle </li></ul><ul><li>If you select one or more approaches, and then fail to achieve them, that your organization gets stuck in the middle without a competitive advantage </li></ul>
  14. 16. <ul><li>Thank You </li></ul>

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